NZD/USD fades a knee-jerk spike closer to yearly tops

The NZD/USD pair faded a knee-jerk bullish spike and quickly reversed around 50-pips from closer to yearly tops touched in the past hour.

Possibilities of some big stops being triggered on a move beyond 0.7330 level seemed to be the only reason behind the pair's sharp upsurge during early NA session. The pair jumped to an intraday high level of 0.7369 but ran through offers at higher levels following the release of US economic releases. 

Data released from the US showed weekly jobless claims dropped less than expected during the week ended July 7. Meanwhile, the price of finished goods and services sold by producers (PPI) unexpectedly ticked higher during the month of June, which to some extent seems to have lifted expectations from Friday's inflation figures. 

A higher than expected headline CPI would revive hopes for additional Fed rate hike action in 2017 and the same is being reflected by a sharp upsurge in the US Treasury bond yields, which eventually attracted some fresh selling pressure around higher-yielding currencies - like the Kiwi. 

Investors would remain focused on the Fed Chair Janet Yellen's remarks, coming out of her second day of testimony, while the Fed Governor Lael Brainard's speech would influence sentiment later during the NY trading session.

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Technical levels to watch

A follow through retracement now seems to find immediate support near the 0.7300 handle, below which the pair is likely to slide back to 0.7275-70 horizontal zone ahead of 0.7225-20 support.

On the upside, momentum back above 0.7345-50 region now seems to pave way for continuation of the pair's upward trajectory towards reclaiming the 0.7400 handle with some intermediate resistance near 0.7380-85 region.